Fujitsu, Panasonic reportedly close to merging chip units

SAN FRANCISCO--Japanese electronics firms Fujitsu Ltd. and Panasonic Corp. are close to finalizing a merger of their struggling semiconductor businesses, according to a report Friday by NHK, Japanís national public broadcasting organization.

The report, which cites unidentified sources, said the two companies are finalizing plans to launch the joint company by March 2014. Part of the funding is expected to come from a bank affiliated with the government, the report states. The bank is potentially the Innovation Network Corp. of Japan (INCJ), a public-private partnership that was involved in the bailout of Renesas Electronics Corp. late last year.

The two firms are also in talks with the Development Bank of Japan over a potential investment worth hundreds of millions of dollars, according to the report.

But Fujitsu denied that a merger deal was imminent. "Today there were certain media reports concerning the Fujitsu Group's semiconductor business. These reports are not based on any official announcement made by Fujitsu or interview between a Fujitsu executive and the media. No decision has been made regarding this matter," Fujitsu said in a statement published on the company's website.

Definitely Yen appreciation is part of the equation. But then there are companies like Toshiba and Sony who did reasonably well inspite of this.
Again you have to remember, Japanese yen has been undervalued traditionally because of the government intervention. so IMO the current appreciation is more like return to balance rather than imbalance.
http://www.economist.com/node/8679006?story_id=8679006

The trend of putting the world into a giant supply chain is advancing. No one can be excluded from it. Design house companies will focus on only development. Foundry will focus on only producing chips, better utilizing the equipment and minimizing the investment cost. Like everything else, this approach has pros and cons.
I still not absolutely sure what keep Japanese firms from thriving. They might lack behind on some new product development. Yet, they did put out some interesting products that never really catch the interesting from consumers. For example, Sony Personal TV. Years back, Sony has created a portable TV, similar to a tablet today.

Which is more likely? Just about every Japanese firm in every Japanese industry got stupid and lost its focus at the same time?
Or that they are all suffering from a yen that had appreciated to record levels, thus making their products uncompetitive overseas. The yen has fallen nearly 20% since its peak that was maintained for a couple years but ended this fall, and that will relieve some of their pain. But it is still a quarter more valuable than where it spent most of the aughts.

Japanese Engineers and Managers are educated mostly in Japan. In addition to being culturally inflexible ( a consequence of being far ahead for 3 decades ), they are also poor in English, Math and Physics compared to their counterparts in So. Korea and Taiwan. But what drives me nuts about getting R&D done in Japan is far too much emphasis on old - fashioned experimental work and not enough modeling and parametric design beforehand to reduce the workload. It all adds up to slooow product development nd perhaps also being on the wrong track and taking too long to find out. IMHO that Japan needs a third shock ( after Meiji, Hiroshima ) to get moving again.

For more than a decade Japan's electronics giants have been slooowly consolidating from a large group of vertically oriented companies addressing a broad range of markets to a smaller set of larger, more focused enterprises.
As we have seen with Elpida and Renesas, the strategy has not created any big successes yet. It is not clear a Panasonic/Fujitsu SoC combo would have a better shot.

Japan has followed the same trend as the US had faced some twenty years ago, but worse. It lacks capable management and required innovation to keep it's semiconductor industry alive.
Moore's law is going to hit the brick wall within ten years. Major changes are on the horizon.

What are fundamental reasons Japanese semiconductor industry is suffering? They have resources compatible to other industrialized nations in terms of technologies, money, people and electronics customers within Japan. Their cost is compatible to US and there are many prosperous semiconductor companies in US.